Marketing Issues Affecting Telecommunications Services - Assignment Example

Marketing Issues Affecting Telecommunications Services Number Marketing Issues Affecting Telecommunications Services Introduction Analyzing the structure of the British telecoms system when the industry is in the midst of an uncompleted phase of major structural change and telecommunication innovation is as great as any experienced this century, immediately presents major problems in the telecoms sector. The business of mobile telephony is changing; first, institutions have increasingly become multi product firms covering several varieties of services and products far wider than the traditional role of asset liability transformation. To be specific, fee income and off balance sheet business have increased in importance for telecommunication companies. Secondly, the traditional specialist basis of the British telecommunication system has given way to a more conglomerate structure which has eroded the traditional distinctions between the major areas of telecom. The UK telecommunication system is in midst of a period of major structural changes as all types of telecom institutions are diversifying their range of business under the impact of greatly intensified competitive pressures, international pressures, major changes in the structure and style of regulation, technology and changes in the market environment. The major factor creating structural change in the telecoms institutions is competition: the competitive environment has intensified considerably. The UK represents a case study of the power of competitive pressures to induce structural change in a telecommunication system. The globalization of telecommunication markets and the increasing integration of markets both domestically and internationally, create pressures on regulation when it is not competitively neutral as between institutions within a national system and between countries (Palmer, 2008). Telecommunication institutions such as Nokia need to identify major areas in the sector that will lead to financial success at times of stiff competition. Nokia needs to diversify its services to the international market. This is referred to as internationalization of services and it goes beyond the basic nations of trade and exporting to encompass all aspects of business activity that go beyond national borders. Most telecommunication institutions tend to focus on marketing in a domestic context. For the next five years, the Nokia needs to have a thorough understanding of their target market including its size and the share they hope they can realistically achieve. Once they have developed a clear understanding of the market in terms of size, location, groups of potential customers and their profiles, potential competitors, trends and influencing factors, it will be easier for them to define their overall marketing strategy clearly. The company can also break down its marketing strategy into objectives and targets relating to the volume and share of the market or market segments they hope to achieve and when they intend to achieve them. The company needs to consider, for example, who their initial marketing targets (specific groups or market segments) and what products, services or particular deals will offer to them. Further, they also need to consider their unique selling proposition and how it differentiate from their competitors, when they hope to achieve the targets, when they will be choosing a new market and whom they target, for instance in five years time. On service classification, telecommunications services of Nokia are typically heavily information based services, and in principle are easily digitized. This makes export relatively straightforward in theory. However, the complexity of many telecommunication services suggests that significant interpersonal interaction is often required in their delivery. In first place, there is often strong pressure for Nokia to have physical presence in the market in which it is delivering its services. Many customers, especially those in retail markets feel the need to be able to access their service provider and are reassured by a physical presence, even if the provider is providing the services in a remote place. Secondly, regulators commonly require such a presence. Thus, in comparison with suppliers of manufactured gods, telecommunication services providers will often be less reliant on exports and much more likely to internationalize by establishing overseas operations. This in turn raises important issues in relation to the nature and management of service delivery (Pezzullo, 1998). In addition, another challenge that Nokia face when operating internationally related to cultural differences and the greater the difference in cultures, the greater the challenges. Cultural differences affect Nokia’s internationalization in two ways. First, there are issues related to familiarity and use of financial products. It is worth noting that in many Islamic countries, the prohibition of interest means that credit card holders will seek to pay off accounts at the end of each month rather than accumulating interest charges (Pezzullo, 1998). Secondly, culture can have impact significantly on interactions where the two parties have different heritages. Cultural differences can affect the development of long term relationships, where the creation of trust plays a central role, for instance, the rather direct negotiating negotiation styles of the British during marketing may appear quite threatening and even rude in Japan, thus inhibiting the development of mutual trust (Zeithaml, Binter and Gemler, 2009). Further, cultural differences are often a source of misunderstanding in communications, with all sorts of negative consequences for service provision. A good example is seen when Egg, the UK based internet bank, made huge investments in France but withdrew after only two years. It can be attributed that a poorly thought through and culturally insensitive advertising campaign was one of a number of factors that contributed to the failure of this venture. In order to succeed, telecommunication service providers should rely on offshore outsourcing to deliver customer service to domestic customers from bases in India have invested heavily in ensuring that local staff are familiar with key aspects of culture. The reasons to expand marketing of telecommunication services by Nokia may be divided into domestic factors that will tend to encourage the company to look outside its national markets and factors that encourage the company to consider expending operations overseas. There are conditions in the domestic market that may in some way inhibit the company from achieving its strategic marketing goals. The simplest condition might be due to slow growth, high costs or high levels of competitions in the domestic market. Cost consideration, for example, have been a major driver of the decision of many other telecommunication service providers to establish call centers in countries such as India. Overseas expansion is thought to be influenced by features of non domestic markets that encourage a firm to consider expanding its operation to more attractive places to do business. Marketing is concerned with supplying consumers with services which they want. In order for a financial institution to be able to do this successfully, marketers need to be able to understand the needs and motivations of existing and potential consumers, as well as how they go about making buying decisions. This fact is important to the development of suitable marketing strategies, whereby a competitive advantage for an organization in its chosen markets is identified, built and maintained (Zeithaml, Binter and Gemler, 2009). Marketing involves the product, pricing, promotion, and distribution. The daily activities of people who work in marketing departments revolve around designing, developing, and enhancing products; promoting the products features and benefits to the target markets; and distributing the products to the target markets. These activities constitute the four elements of what is known as marketing mix, for instance, the service or the product, price, promotion and place Consumers, with their different needs, requirements and preferences, invariably do not exhibit the same behavior across all buying situations, nor is their behavior equally influenced by the same set of factors. Essential to the study of buyer behavior is an understanding of market segmentation. In any market economy, change is a continuous, dynamic process. Competition between firms is an important factor in effecting change but is itself influenced by the degree to which profitable opportunities are perceived to be available, the regulatory framework and changes in information technology which may reduce costs and introduce new methods of distribution. Environmental change may also encourage organizations to alter their structure, internally and externally, in order to enhance their ability to exploit new market opportunities. All these factors provide the context in which the marketing effort of telecommunication services is examined under changes in the nature of personal assets and liabilities, changes in the regulatory framework, the trend towards globalization, the effects of fundamental changes in information technology, and the redrawing of the boundaries of telecommunication service firms (Lovelock, Wirtz and Chew, 2009). The concept of telecommunication service product is a complex one. Telecommunication services are highly intangible and consequently distinguishing the product from its price and the mode of delivery may sometime be difficult. An added complication is that many telecommunication services are long term and consequently the precise benefits that they offer may be uncertain. In order to examine the product component of the marketing mix, it is important to define clearly what is meant by the term ‘product’ Solutions In the marketing of telecommunication services and products, there must be trust in the relationship between the company and the customer since effective services marketing depends on the management of trust. This is because the customer, typically, must buy a service or a product before using it. Trust will ensure that more customers are able to use the particular telecommunications institutions services. In the process of thinking about the right approach to adopt for marketing operations, there are three important decisions that require consideration: which markets to enter, how to enter those markets, and how to market services within those markets. In very simple terms, the choice of markets to enter is based on identifying those that offer the best long term returns. This may sound like a straight forward decision; in reality, it is potentially very complex. Cultural proximity is frequently a major factor in determining international developments, at least during the early stages of a strategy for overseas expansion. The choice of method of market entry is subject to a variety of influences, including the nature of the service, the international resources and capabilities of the firm, the regulatory environment and the host-country environment. This means that it can be difficult to generalize about the best mode of market entry for any given service or product, but investment modes do appear to be the preferred route to market for most telecommunications services providers; reflecting perhaps the importance of a physical presence in the market, regulatory considerations, the value of local knowledge and the need for control over the service itself and the way in which it is delivered (Lovelock, Wirtz and Chew, 2009). After a method of market entry has been selected and implemented, the issue of marketing needs to be addresses. Marketing has traditionally revolved around the debate between standardization and customization. One of the questions that telecommunications institutions should be ready to answer is that: should an organization operate with the same marketing strategies and tactics be tailored to the local market? In basic terms, this can be thought of as directly analogous to the choice between a global strategy and a multi-domestic strategy. Advertising and promotion can also solve the marketing problems of the telecommunications service providers. These are the means by which organizations provide information about themselves, their services, pricing structures and delivery channels to a variety of audiences, including existing and potential customers, intermediaries, employees and the media. The communication process in marketing has traditionally stressed the attributes and benefits of a particular good or service in order to create awareness, stimulate interest and encourage purchase (Lovelock and Wirtz, 2010). The role of communications is much broader, covering all aspects of the image of an organization and the way that image is presented to a variety of interest groups within society. Communication provides an opportunity banks to differentiate themselves at both corporate and brand levels. Communicating effectively requires a thorough and systematic approach to promotional planning to ensure that the message is correct and consistent with the desired image of the service or the organization. The promotion of telecommunications services has many similarities with the promotion of physical products, although some differences do characterize service promotion, either as a result of the nature of the service industries themselves or as a result of the characteristics of services. In developing a communications strategy, the particular problem facing providers of telecommunications services is that they have no physical product to present to consumers and consequently a major requirement of promotion is to develop a message and a form of presentation which allows the organization to present a product which is essentially intangible in a tangible form. The manner in which a telecommunications service provider prices its services also determines success. The pricing of retail financial services have become a major strategic issue and of increasing significance in marketing strategies. Pricing in marketing strategies of telecommunications services has not been a key issue than in other industries. First, competition has not been intense in retail telecommunications services as in most other industries. Secondly, regulation had the effect of limiting competitive pressures and created what amounted to economic rents in many sectors of finance. Profits were reasonably stable and secure which reduced the pressure to compete through pricing (GrÖnroos, 2007). In this conducive and largely protective environment, competitive strategies took the form of non price competition which had the effect of raising costs. In effect, the economic rents created by regulation were appropriated by higher costs rather than profits. Thirdly, and partly because there was no necessity, companies in particular had only limited information about the costs of their services. There has been a growing demand for some transparency in the pricing of telecommunications services and products in general as consumers know the price of dry cleaning, car servicing, window cleaning and many more. Telecommunications seems to be peculiar in that pricing often lacks transparency. As competition has intensified, price competition in retail telecommunications services and products has become a more important and visible aspect of marketing strategies. This has been reinforced by regulators’ demands for more transparency in pricing and costs. It is also evident that price competition will increase most notably in the telecom and insurance sector. The telecommunication service providers should engage in market monitoring. Monitoring is a useful technique for companies for a variety of reasons. Monitoring activities generate a consistent database of information about the environment, customers, prospects, and competitors over an extended period of time. These databases provide a rich source of data for analysis, comparisons, and management reporting. Monitoring can be used to describe customers, prospects, and competitors so as to update the marketing plan. It can be used in many cases for analysis of marketing problems. Or it can be used for database marketing, sales performance reviews, and many other purposes (Kasper, Helsdingen, and Gabbott, 2006). Technology is making information for marketing decisions increasingly accessible. Firms have the ability to track the purchase behaviors of customers electronically and to better determine what they want in changing the nature of marketing. The integration of telecommunications with computing technology provides marketers with access to accurate information not only about customers and business trends. In addition, the internet has evolved as a powerful communication medium, linking customers and companies around the world via computer networks with e-mail forums and web pages. Growth in internet use has given rise to an entire industry that makes marketing information easily accessible to both companies and customers. Telecommunication service providers should aim at online advertising in order to reach a wide range of consumers both domestically and internationally. The trick to making the most of marketing opportunities is for everyone in the sector to prepare for them in advance. To plan and prepare for marketing opportunities, the telecommunication service providers should implement a marketing management process (Berry, 2004). Finally on solutions, telecommunication service providers must ensure that there is social responsibility in their marketing of services. It is quite possible for accompany to satisfy its customers yet be in conflict with the well-being of society as a whole. For instance, a firm might market a product that satisfies a number of consumers but dangerously harms the environment. Telecommunication companies, like other firms are respected institutions in the community, and are expected to play an active, socially responsible role in civic affairs. Through their community relations programs, they must support the arts and sporting events. Frequently, a telecom company should take the initiative in addressing a specific cause, such as promoting neighborhood improvement or developing recreational opportunities for the youth (Hester, 1996). Conclusions The major structural changes that have dominated the more recent evolution of the British telecommunication system relate to competition, the process of diversification, the undermining of the historic structured system, the form and extent of regulation, the increasing internationalization of telecommunication, and the acceleration in the pace of financial innovation. Overwhelming all other forces has been the role of competition as the competitive environment has intensified within and between sub-sectors of the system. In the process, the specialist basis of telecommunications institutions has been powerfully eroded as diversification has produced a trend towards financial conglomerates. This has been a comparatively easy process in the UK as historic demarcations have been largely self imposed rather than forced by legislation. At the same time, regulation has become more formalized and explicit, and competitive measures have undermined most of the traditional features of self imposed regulation based upon restrictive practices. Venturing in the international markets has involved the existing institutions widening the range of products and services, and institutions purchasing firms in other sectors. The recent years has witnessed mergers and purchases between companies, securities traders’ diversification of major institutions was handled predominantly by foreign securities firms and this clearly exposed weakness of the British market. The role of marketing in the telecommunication industry continues to change. For many years the primary focus of marketing was public relations. Now it is clear, as it has been to other industries for more than the last decade that the focus must be on the individual customer, meeting and even anticipating his or her needs, and developing trust, Long term relationships by delivering high quality, and personalized service. All elements of the marketing concept customer satisfaction, profit, integrated framework, and social responsibility, will remain important. Customer satisfaction must receive the greatest emphasis in the coming years The chief concern to most company executives will be to focus on legal and regulatory issues. Telecommunication companies are particularly concerned with eliminating barriers that give unfair advantage to telecom services competitors. Another concern pertains to technology: keeping non telecommunication competitors out of the system. References Berry L (2004). Marketing services: competing through quality. Simon & Schuster publishers. Pp 115-118. GrÖnroos, C.(2007), Service Management and Marketing, 3 rd Edition, New York, John Wiley & sons. Pp 56-79. Hester L (1996). Successful marketing research: the complete guide to getting and using essential information about your customers and competitors. John Wiley and Sons. Pp 40-42. Kasper, H., van Helsdingen, P. and Gabbott, M. (2006) Services Marketing. New York, McGraw-Hill, pp 213-117. Lovelock, C. and Wirtz, J. (2010) Services Marketing: People, Technology, Strategy, New York, SAGE. Pp 98-101. Lovelock,C., Wirtz, J., and Chew, P. (2009) Essentials of Services Marketing, Management: A strategic perspective, 2nd Edition, New York, John Wiley and Sons Palmer, A. (2008) Principles of Services Marketing,5th Edition, New York, McGraw-Hill. Pp 112-114. Pezzullo A (1998). Marketing telecommunication services. London, Kogan Page publishers. Pp 10-15. Zeithaml, V., Bitner, M.J. and Gremler (2009) Services Marketing: Integrating customer focus across the firm, 5th Edition, New York, McGraw-Hill. Pp 47-50. Read More